APL Apollo Q2 volumes rebound 13% to 963 kT

APL Apollo Tubes Ltd (

) reported a sharp recovery in Q2FY27, with consolidated sales volumes rising 13% year-on-year to 963 kilo tonnes, reversing the 6% decline seen in Q1. Despite this rebound, the stock slipped 3% post-update as investors weighed the slower H1 trajectory. For the first half, volumes grew only 4%, well below the management’s 15–20% guidance for FY27. This gap raises the risk of a downward revision in targets, which could unsettle sentiment. The pressure is compounded by elevated hot-rolled coil (HRC) prices, making distributors cautious on inventory build-up. Still, profitability appears resilient, with Q2 Ebitda expected to hold near ₹5,500 per tonne, similar to Q1. In Q1, Ebitda rose 11% YoY to ₹410 crore despite weaker volumes, highlighting management’s focus on margins. Regional performance was mixed. UAE volumes fell 55% due to West Asia disruptions, but excluding this, overall growth was 18%. The SG Premium brand saw a 30% dip after surging in Q1, reflecting competitive pressure from unorganised players. The medium-term story remains capacity-led. APL is expanding from 5 mtpa to 8 mtpa over 2–3 years, with two new plants (0.5 mtpa) in eastern India expected in Q3. Management also targets raising the share of value-added products from 65% to 75–80% by FY28, which should reduce sensitivity to steel price swings. Emerging opportunities in solar applications could add up to 5% of revenue in the next few years. Our view: The Q2 rebound is encouraging, but the miss on H1 guidance tempers optimism. Sustained margin protection amid high HRC prices and execution of capacity expansion will determine whether valuations at 41x FY27 earnings remain justified. Investors should watch for guidance revisions and traction in value-added products.